As well as standard benefits received in accordance with award conditions, 40% of employees received one or more special benefits as part of their remuneration in 1994.

In addition to wages, salaries and standard award benefits, such as holidays, sick leave and superannuation, some employees receive special benefits from employers as part of their remuneration. These special benefits can range from discounts on goods or services to provision of housing or transport. The special benefits offered are often directly related to the type of job in which the employee works.

The introduction of the Fringe Benefits Tax (FBT) in 1986 led to a decline in the receipt of most types of employee benefits. However, the importance of these benefits as an alternative to cash income is still significant. In 1994-95, $2.7 billion was collected in FBT by the Australian Taxation Office. This is equivalent to $5.7 billion paid to employees in special benefits1.All benefits included in this review, apart from union dues/professional association membership fees and shares in the employer's business, are subject to the FBT. However, not all benefits subject to FBT are included in this review.

In 1994 the most common specific special benefit received by employees was transport (15% of employees) followed by telephone (8%) and shares (4%).

Employee benefits in main job

Special benefitscomprise the categories used in the tables. However, the value or scale of these special benefits was not collected. Consequently employees recorded as receiving a particular type of benefit may have received the benefit outright or have received some discount or subsidisation. Employees may have received more than one type of special benefit.

An employee's special benefit did not necessarily come directly from their current employer. They may have received it as a result of their employment in a particular occupation or industry, e.g concession air fare granted by an airline to a travel agency employee.

Standard benefitsreceived in accordance with award provisions are not included in this review. They include superannuation, leave entitlements, over award payments, bonuses, or payments instead of leave.

Who receives benefits?In 1994, managers and administrators were most likely to receive one or more special benefits (74%) followed by salespersons and personal service workers (52%). Managers and administrators were also the most likely to receive each type of special benefit except for union dues/professional association fees and study leave.

In 1994, men were generally more likely to receive a special benefit than women. There were two specific benefit categories that did not follow that pattern. Low interest finance and study leave had equal proportions of male and female employees receiving them (both 3%). This overall bias in favour of men is largely accounted for by the higher proportion of females working part-time (see Australian Social Trends 1994, Trends in part-time work) and the predominance of men in managerial and administrative positions.

Full-time workers were more likely to receive special benefits than part-time workers. The general category of other goods or services, which includes retail discounts, was the only exception. This is because the retail trade is the main industry which provides this benefit and there is a relatively high proportion of part-time workers employed in retail trade.

Similarly, proportionally fewer casual than permanent employees received special benefits. However, 17% of casual workers received an other goods or services benefit. This is also because of the high proportion of casual workers employed in the retail trade industry.

Private sector employees were more likely to receive benefits than public sector employees. The most noticeable differences in 1994 were in transport benefits (16% in the private sector and 10% in the public sector). Public sector employees were slightly more likely to receive holiday expenses (5%) and low interest finance (3%) than private sector employees (3% and 2% respectively). In 1994 employees in public enterprises such as Qantas, Telstra and the Commonwealth Bank were included in the public sector.

There is a close relationship between the type of special benefit received and the industry of the employee. 47% of employees in the retail trade industry received other goods or services benefits (retail discounts are a major component of this general category). Telephone benefits were most likely to be received by communication industry employees (39%) and low interest finance by employees in the finance and insurance industry (39%). Holiday expenses were most likely to be received by transport and storage workers (27%).

Not all benefits received related directly to the industry of the employee. Medical benefits were only received by 2% of health and community services workers. This may reflect the large public sector component of this industry and access of the general population to services provided under Medicare.

Employees with high incomes generally received more special benefits. In 1994, 29% of employees earning less than $160 per week received benefits. This compares to 46% of those employees earning between $640 and $800 per week and 66% of those earning $960 or more per week.

(a) Because data for 1994 exclude school students who were also employed while data for 1984 include school students in employee totals, the comparison has been made using full-time employees only.(b) Transport benefits are not directly comparable since, between the two surveys, the definition of a transport benefit was widened to include the payment or subsidisation of travel to and from work.

The impact of the Fringe Benefits TaxEmployers generally aim to minimise their own and their employees' tax burdens. Prior to 1986 there was an incentive to pay employees not only in wages and salaries but also in special benefits. This effectively lowered an employer's wages and salaries bill, which is subject to payroll tax and workers' compensation premiums, and thus eased their tax burden. It also helped employees in that receiving benefits instead of income lowered their annual earnings, thus reducing their personal income tax.

The Fringe Benefits Tax (FBT) was introduced to eliminate what was perceived as tax evasion 2. The FBT led employers to favour replacing special benefits with increases in wages or salaries3. Otherwise employers could use special benefits not subject to FBT, e.g shares, union dues or professional association fees. An employee receiving higher pay rather than special benefits will pay more tax. This may disadvantage an employer looking for highly skilled staff so some employers may still use special benefits to attract and keep highly valued staff 3.

Data from the Employment Benefits Survey for 1984 and 1994 demonstrate the shift away from most special benefits among full-time employees. However, there was an increase in the proportion of full-time employees receiving shares (3 percentage points) and study leave benefits (1 percentage point). Although the increase in the proportion of employees receiving a transport benefit was large (8 percentage points), there was a definitional change which makes the data not directly comparable.

Endnotes1 Commissioner of Taxation (1995)Annual Report 1994-95.

2 Raskall, P. (1994) Perks of the Job: The Distribution of Non-cash Wage Income in Australia in the 1980s Centre for Applied Economic Research, Social Policy Research Centre, University of NSW.

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